In a significant move to liberalize the financial sector, the Indian government has introduced a pivotal bill in the Lok Sabha. This legislation aims to raise the permissible limit for Foreign Direct Investment (FDI) in the insurance sector to 100%. The proposed changes are set to reshape the regulatory landscape for insurers operating in India.
The Sabka Bima Sabki Raksha (Amendment) Act, 2025
The bill, officially titled The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, was circulated to Members of Parliament on 16 December 2025. This comprehensive piece of legislation seeks to amend three key existing laws that govern the insurance industry in India. The primary objective is to attract greater global capital and expertise into the sector.
Key Legislative Amendments Proposed
The new bill targets amendments to a triad of foundational insurance laws. It proposes changes to the Insurance Act of 1938, which is the principal act regulating the insurance business. Furthermore, it aims to modify the Life Insurance Corporation Act of 1956, which governs the state-owned behemoth LIC. Lastly, the bill also seeks to amend the Insurance Regulatory and Development Authority (IRDA) Act of 1999, which established the sector's regulator.
By amending this legislative framework, the government intends to create a more flexible and investor-friendly environment. The hike to 100% FDI is expected to provide a major boost to capital inflows, enabling insurance companies to expand their operations, enhance product offerings, and improve penetration in the vast Indian market.
Potential Impact and Industry Outlook
This bold reform, once passed by Parliament, could be a game-changer for the insurance industry. It promises to bring in fresh capital, advanced technology, and global best practices. For consumers, this could translate into more innovative insurance products, competitive pricing, and improved service standards.
The introduction of the bill underscores the government's commitment to strengthening the financial ecosystem and making insurance coverage more accessible to all citizens, aligning with the spirit of its title—'Sabka Bima Sabki Raksha'. The move is also seen as a step towards integrating the Indian insurance market more deeply with global financial flows.
